29 November 2018

With growing voices of concern from local authorities affected by the rollout of Universal Credit, Southwark Council is today set to launch its follow-up report into its impact on social housing tenants.

Warning bells have already been ringing loud and clear for Southwark Council, one of the first boroughs nationally to see the full roll out of the new system. Southwark Council manages almost 37,000 social rented homes, making it one of the biggest social landlords in the country and has previously raised concerns about the number of its tenants claiming Universal Credit (UC) and then falling into significant rent arrears.

Last year the council gave evidence to the Work and Pensions Select Committee and launched Safe as Houses: a report based on independent research. Today, Southwark Council is launching its second in-depth study, again carried out by the Smith Institute, at an event at the House of Lords. The event will be chaired by Lord Bob Kerslake, who will lead a panel discussion on the findings of the report and the wider impact of Universal Credit.

Four key findings emerge from new research:

Despite assurances from the government that new rent debts are repaid over time and that any rent arrears that may be associated with UC are temporary and transitional, in fact, the reverse may be true. The evidence shows that, even fifteen months after claiming UC, those affected were still consistently underpaying rent due – by 7 per cent on average

Initiatives by the Department for Work and Pensions to reduce tenants accruing rent arrears have not been successful. Those who started to claim UC a year later than those involved in the original research saw almost identical impacts for their rent payments

The research also suggests that those who struggle to make their claim for UC or those who have multiple, significant changes in circumstances while claiming UC are most likely to fall deepest into rent arrears

Southwark Council was the first local authority in the country to use The Landlord Portal, which has been continually promoted by the Government as the fix to rent arrears. It has not proved successful since its introduction by DWP from April 2017 according to Safe as Houses 2 research - the new research suggests it makes no difference to the arrears of tenants

Furthermore, the average level of rent arrears among council tenants who had claimed UC is more than three times the level of rent arrears among those tenants who were claiming HB during the same period of time.

More worrying still, Pecan Foodbank, which operates in Southwark, and which reported a huge increase in demand between 2016 and 2017, has seen demand increase by another 30 per cent between 2017 and 2018. It continues to see an increase in demand for its services that is directly attributable to UC impacts. That situation is similar to that reported by Trussell Trust in all areas of the country where UC has rolled out. Pecan, which is affiliated to Trussell Trust, say that 80% of the increase in demand they have seen since last year may be attributed to impacts of UC. In 2017 Pecan fed almost five thousand Southwark households and distributed forty seven tons of food.

The council’s own local welfare fund (Southwark Emergency Support Scheme - SESS) has been in place since 2013 and reported a big increase in demand for emergency food parcels after UC rollout began to roll out from 2016 onward. Just over three hundred parcels were issued in each of years before UC rollout commenced but numbers have increased every year since. This year the council expects to provide more than seven hundred food parcels – an increase of well over 100 per cent since UC started to rollout in the borough.

Councillor Victoria Mills, Cabinet Member for Finance, Performance and Brexit at Southwark Council, said: “It is a disgrace that the Government’s flagship benefit reform is leaving residents waiting for money to pay for the roof over their head and that huge numbers of residents are dependent on charity for food. Any delay to payments for those who are already under immense financial pressure will result in unrecoverable debt and unacceptable stress on people’s lives.

“The stark evidence in this second report makes it very clear that people are suffering the consequences of a system which doesn’t work in its current form. A year on from our first research, the issues have simply got worse. We have to act on this evidence now and look at how we can support our residents and the pressure on our services. This situation is echoed across the country. The Government needs to take rapid steps to fix Universal Credit or urgently acknowledge that they have created a system that is unworkable and broken.

As Universal Credit full service continues to be rolled out across the country, this Safe as House 2 report launch is an opportunity to further discuss the wide-reaching impact of the new benefit system and the wider welfare reform debate.